(Bloomberg) — Wall Street traders braced for key inflation data as stocks hit record highs. U.S. Treasuries fell as the dollar recorded its longest winning streak in more than two years.
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The S&P 500 neared 5,800 on the eve of a report in which consumer prices are expected to remain moderate. The index reached a record high for the 44th time in 2024, with tech stocks once again taking the lead. Apple rose 1.7%. Nvidia canceled the five-day rally. Tesla’s stock fell slightly ahead of the launch of its robotaxi. Alphabet fell 1.5% on news that the U.S. is considering breaking up Google in a historic antitrust case against the big tech giant.
Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said major technology stocks have seen increased volatility in both directions recently, but the weakness presents an attractive buying opportunity.
“We remain positive on the outlook for artificial intelligence as well as the technology sector,” he said. “Given this backdrop, we believe we should take advantage of volatility to build long-term AI exposure.” .
Markets weigh on latest Federal Reserve numbers showing Chairman Jerome Powell received some pushback on September’s 0.5 point rate cut as some officials want smaller rate cuts After a minute, it barely moved.
“Today’s Fed minutes were pretty ‘boring’, which may actually be a good thing for stock investors,” said TradeStation’s David Russell. “Policymakers agree that they see inflation slowing and job growth potentially weakening, which will put interest rate cuts on the table if needed. The bottom line is that Mr. Powell could push the market back toward the end of the year.”
The S&P 500 rose 0.7%. The Nasdaq 100 rose 0.8%. The Dow Jones Industrial Average rose 1%.
The 10-year Treasury yield rose 5 basis points to 4.06%. The Bloomberg Dollar Spot Index rose 0.4%, marking its eighth straight session of gains. Oil prices remained steady as U.S. crude inventories expanded and traders closely watched China’s fiscal policy plans.
U.S. inflation will likely slow by the end of the third quarter, reassuring the Fed, which is shifting its policy focus to protecting the labor market.
The consumer price index is expected to rise 0.1% in September, the smallest increase in three months. Compared to last year, CPI rose by 2.3%, marking the sixth consecutive year of slowdown and the mildest level since early 2021. The index, which excludes the volatile food and energy categories, is expected to rise 0.2% as it better captures underlying inflation. 3.2% month-on-month and 3.2% from September 2023.
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“The Fed’s decision to shift its focus from inflation to the labor market may mean that tomorrow’s inflation data, including CPI, will be less likely to move markets as much as in the past,” said Matthew Weller of Forex.com City Index. It means,” he said. “Despite these logical observations, on the back of Friday’s impressive jobs report, this month’s CPI report could still increase market volatility, signaling possible new upside risks to inflation. It’s the content.”
According to a survey conducted by 22V Research, 42% of investors expect market reaction to CPI to be “mixed/negligible,” while 32% say it’s “risk-off,” while 32% think it’s “risk-on.” Only 25% of respondents are
“There is general optimism regarding inflation,” said Dennis Dubuscher, founder of 22V. He also noted that while the proportion of investors expecting a recession has fallen, the proportion of investors who think financial conditions need to be tightened has reached the highest level since June.
For stock prices to continue rising, Ed Clissold of Ned Davis Research said, inflation will need to continue to fall, the economy will need to hit a soft landing, and U.S. corporate profit growth will need to remain strong and expand.
Saturday marks the two-year anniversary of the start of the bull market, but a key part of the current bull market that has been missing for much of the last few years – the broader part – could lead to the next bull market as stocks rise. There is sex.
Large-cap and growth stocks have historically outperformed in the third year of a bull market, but they are now overbought compared to small-cap and value stocks, Clissold said.
Meanwhile, billionaire investor Bill Gross said the bull market that has nearly doubled the value of U.S. stocks over the past five years is tapering off, and investors expect low but positive investment returns. states that it should be done.
He recommends keeping your exposure to the stock market at an average level and concentrating your portfolio in defensive stocks with a small position in fixed income.
“There’s no bear market, but it’s no longer the same bull market,” said Gross, co-founder and former chief investment officer of Pacific Investment Management.
Company highlights:
Tesla’s deliveries from its Shanghai factory increased for the third straight month, marking its highest quarter ever for shipments in China.
Taiwan Semiconductor Manufacturing Co. posted a better-than-expected 39% rise in quarterly sales, easing concerns that AI hardware spending is starting to taper.
Rio Tinto Group has agreed to acquire Arcadium Lithium Ltd. in an all-cash deal, valuing the U.S.-listed miner at $6.7 billion, expanding its control over battery metals, and increasing its stake in 2017. It has returned to the M&A fray with its largest transaction ever.
B. Riley Financial’s lenders are increasing their oversight of the company’s finances, including weekly updates on liquidity and some transactions, in an effort to pull the loss-making investment firm out of the water.
Generac Holdings Inc. is facing a shortage of portable backup generators after Hurricane Helen and other recent storms left millions of Americans without power.
GSK announced it will pay up to $2.2 billion to settle about 80,000 U.S. lawsuits related to allegations that its older reflux drug Zantac was contaminated with suspected carcinogens.
This week’s main events:
US CPI, new unemployment claims, Thursday
Fed’s John Williams and Thomas Barkin speak on Thursday
JPMorgan and Wells Fargo kick off earnings season for big Wall Street banks on Friday.
US PPI, University of Michigan Consumer Sentiment, Friday
Fed’s Laurie Logan, Austan Goolsby and Michelle Bowman speak on Friday
The main movements in the market are:
stock
As of 4 p.m. New York time, the S&P 500 was up 0.7%.
Nasdaq 100 rose 0.8%
Dow Jones Industrial Average rose 1%
MSCI World Index rose 0.6%
Bloomberg Magnificent 7 Total Return Index Little Changed
Russell 2000 index rose 0.3%
currency
Bloomberg Dollar Spot Index rose 0.4%
The euro fell 0.4% to $1.0939.
The British pound fell 0.3% to $1.3065.
The Japanese yen fell 0.8% to 149.32 yen to the dollar.
cryptocurrency
Bitcoin fell 2.2% to $60,966.5.
Ether fell 1.1% to $2,415.64.
bond
The 10-year Treasury yield rose 5 basis points to 4.06%.
Germany’s 10-year bond yield rose 1 basis point to 2.26%.
UK 10-year bond yield is almost unchanged at 4.18%
merchandise
West Texas Intermediate crude oil fell 0.2% to $73.44 a barrel.
Spot gold fell 0.5% to $2,609.26 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Denitsa Tsekova.
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